Don’t Judge My Shopping Therapy!

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Are you a rational shopper?

Marketers traditionally rely on metrics that model consumers as “rational” decision makers, but the history of marketing is full of poor branding and producing decisions made by companies based on what they thought consumers would want…only to find out they didn’t. According to research quoted in this Forbes article, “78% of consumers believe that they are fundamentally rational when they shop. Despite this fact, 76% of data experts claim that consumers are fundamentally irrational – making purchases based on boredom, tiredness and even the choice of music playing in a store.”

This research suggests shopping is an emotional affair for people and those emotions aren’t always positive. One study revealed that “a fifth of consumers say that they find shopping stressful – even when shopping online.” Marketing metrics that don’t take into account people’s “irrationality” are, therefore, bound to fail.

But is this true? Some individuals may lack the awareness to articulate what they feel and know, to quantify their own desires and justify their actions in terms that appropriately persuade others of the rightness of their decisions. But it’s wrong to label an individual’s choices as “irrational” simply because of this lack of articulation. To label a person’s choices as irrational is to imply that they are wrong.

This type of thinking often flows from adherence to the traditional view of rational action used in neoclassical economic models, where economists assume people have “perfect information.” With perfect information, people know all relevant information to make the best choices and they can articulate said knowledge. This is rarely true in real life where people face asymmetric information problems and cannot always articulate the local knowledge they possess. Thus, when people behave in ways that differ from predicted by neoclassical models, many people leap to call them “irrational.”

Ludwig Von Mises

But lack of perfect information does not invalidate the concept of human rationality. Rationality, at its core, is far more simple and far more powerful. Humans make choices they believe will provide the greatest satisfaction according to their subjective values with the information they have on hand. These values are not only unique to each individual, they are unique to the circumstances under which a good or service is experienced. Changes in our physical environment may well impact people’s emotions. But it then follows that if circumstances change, emotions will change, and thus people’s values will also change. Our subjective values are not created in a vacuum or permanently frozen once created. And if our values change, to be rational our actions must change too. As economist Ludwig Von Mises states in chapter 2 of Human Action, “No intelligent man can doubt that the behavior of men with regard to potatoes and every other commodity is variable. Different individuals value the same things in a different way, and valuations change with the same individuals with changing conditions…”

The Forbes’s article’s plea for marketers to consider the broader consumer experience is a good reminder to the “CX” – or customer experience – community that analyzing “uninspired quantification” is not the same thing as understanding why people act the way they do. Relying on customer survey metrics and scales is no substitute for the greatest market feedback system – the price system. Author Brian Solis’s grand goal – that the CX community focus less on isolated shopping incidents and more on consumer’s “specific needs and how these are manifested in particular emotions through their journey and lifecycle” is perhaps too ambitious to ever be fully realized. Customers can’t always predict future circumstances and how their own desires will change. That said, realizing people’s decisions cannot be entirely captured on a spreadsheet is certainly a step in the right direction.

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Published by Kat

Kathryn is a researcher, grad student and economist in training at George Mason University. She spends her days digging up quotes on economic and foreign policy, debating the costs of government intervention and furiously trying to master the art of Econometrics. During her spare time she...wait...you mean there's such a thing as spare time? Ha! Who knew!
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